Natural gas futures plunge 15.79% from last week's high on profit-booking

Natural gas futures plummeted for the second successive day on October 19 as participants increased their short positions as seen by open interest. Gas price had tumbled 7.8 percent on the NYMEX on Monday.

The energy commodity pared earlier losses to trade in the afternoon session, tracking subdued global cues.

On the MCX, natural gas delivery for October slipped Rs 6.30, or 1.73 percent, to Rs 375.40 per mmBtu at 2.30pm with a business turnover of 5,581 lots.

Gas delivery for November fell by Rs 7.9, or 1.97 percent, to Rs 394 with a business volume of 2,965 lots.

The value of October and November contracts traded so far stood at Rs 858.46 crore and Rs 131.13 crore, respectively.

MCX Enrgdex jumped by 24 points or 0.38 percent at 6,398 at 2:33pm. The index tracks the real-time performance of MCX Crude Oil and MCX Natural Gas futures.

Gas prices have tanked Rs 70.4 or 15.79 percent from the high of Rs 445.80 touched on October 14 due to profit-booking by traders as the forecast predicted milder weather in parts of the US. Also weighing on the price is the production coming back online after storm-related shutdown and improving US market situation.

Kotak Securities said natural gas has corrected sharply as market players played down the possibility of a sharp rise in the US gas exports despite rising global prices. However, any sharp fall may be limited by the expectation of a higher demand during the upcoming winter season.

According to the US EIA drilling report, gas production from shale resources is expected to rise from 87.667 billion cubic feet (Bcf) in October to 87.924 Bcf in November. 

Technicals

The commodity has been trading higher than 50, 100, and 200-day simple and exponential moving averages but lower than the 5 and 20 days SMA and EMA on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 44.80, which indicates a bearish movement in price.

“Natural gas selloffs would continue if prices are unable to move past Rs 418. Major support is seen at Rs 348,” said Geojit Financial Services.

At 9:14am GMT, the natural gas price was slightly up 0.2 percent to $4.99 per mmBtu in New York.

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